From IamFacingForeclosure.com, a blog by a newb investor facing multiple foreclosures.
Don’t do what he did, which is –
Go to real estate investment seminars, ignore most of what they say, buy 8 houses in eight months with 100% financing pulling out extra money at closing time. Discover you can’t fix and flip them fast enough then get crushed by the mortgage payments which you try to pay by credit card.
He’s clear on what his mistakes were. But it’s way late in the game. Plus, blogging you did it through “liar loans” is admitting to crimes and beyond seriously misguided.
Here’s an ugly fact for newbie investors. If the bank forecloses and sells your property for $50,000 less than you paid for it and forgives the loan, then you are liable for taxes on that $50,000 since the IRS treats it as income.
Of course, under the new bankruptcy laws, the banks can decide not to forgive the loan and instead come after you for the money forever.
How many others like him are out there, getting demolished by crazed real estate investment schemes that might have worked in a strongly rising market if done by a seasoned pro with deep pockets, but certainly not now as prices are falling.
Too many made shit up on their loan applications while too many mortgage companies asked too few questions. To their credit, one mortgage company Googled our newb investor, found his earlier blogs about buying and flipping, and denied a loan, which was the final gust against his house of cards.